Deemed gift under the Gift-tax Act requires proof of inadequate consideration and lack of bona fides, not just a valuation report.

Transfer of immovable property for declared sale consideration could not be treated as a deemed gift under section 4(1)(a) of the Gift-tax Act, 1958 merely on the strength of a higher valuation report. The authority had to make an independent, reasoned finding that the consideration was inadequate and that the transaction was not bona fide; those findings were absent. The transaction had been accepted in income-tax proceedings, the parties were unrelated, and no material showed tax evasion. Non-supply of the valuation report also prejudiced rebuttal. The deemed gift addition was therefore unsustainable and the assessment was cancelled.

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Issues: Whether the transfer of immovable properties for the declared sale consideration could be brought to tax as a deemed gift under section 4(1)(a) of the Gift-tax Act, 1958 on the basis of the higher valuation report, and whether the assessment was sustainable in the absence of an independent finding that the consideration was inadequate or that the transaction was not bona fide.

Analysis: To invoke section 4(1)(a), the assessing authority must establish that the property was transferred otherwise than for adequate consideration. Mere reliance on a valuation report, without an independent finding on inadequacy of consideration, is insufficient. The transaction was accepted in the income-tax proceedings, the transferees were not related to the transferor, and no material was brought to show evasion of tax or lack of bona fides. The assessee was also not furnished the valuation report relied upon for initiating the proceedings, which prevented effective rebuttal.

Conclusion: The deemed gift addition was not sustainable, and the cancellation of the assessment was . The Revenue's appeal failed.

Ratio Decidendi: A transfer can be taxed as a deemed gift under section 4(1)(a) of the Gift-tax Act, 1958 only when the authority proves, by an independent and reasoned finding, that the consideration was inadequate and the transaction was not bona fide; a higher valuation report by itself does not suffice.

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